Starbucks Sees Early Success From Loyalty Program Revamp

Starbucks is seeing early signs that changes to its loyalty program are paying off as value-minded consumers take advantage of its rewards, CNBC has learned. Last month, the coffee chain brought back tiers to its North American Rewards program, added "free Mod Mondays" for drink customization, offered double points for using a reusable cup and extended the amount of time for members to redeem their birthday award. The revamp also cut the number of stars — or points — earned per dollar spent when paying with a preloaded Starbucks gift card. Starbucks relies on Rewards to get customers to visit frequently and spend more money on their drink orders. In fiscal 2025, the transactions linked to the loyalty program accounted for 60% of the company's revenue. Those loyal customers are all-important to the chain's turnaround; while its troubles began when occasional customers stopped visiting, its traffic suffered as it lost active Rewards members, too. Now, as members adjust to the Rewards revamp, Starbucks is observing early signals that customers are leaning in to benefit from the loyalty program's new deals. For example, the program's new 60-star redemption option has become its most popular. More than a quarter of all redemptions now opt for the $2 discount off an order. The coffee chain's first "free Mod Monday" more than doubled the number of point redemptions compared with Mondays earlier in the year. Vanilla sweet cream cold foam was the preferred modification for members in the lower green and gold tiers, while those in the reserve tier were more likely to add an extra espresso shot. And while changing the point valuation may have disappointed some customers, members have been capitalizing on easy ways to earn more stars, like adding more money to their accounts for bonus points. Hundreds of thousands of loyalty program members are using their personal cups to earn double stars on their orders. That represents a double-digit increase since the changes went into effect. Starbucks will likely share more details about the loyalty program and the company's broader turnaround efforts on its fiscal second-quarter earnings conference call, which is scheduled for after the bell on Tuesday.